SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TWELVE WEEKS ENDED JULY 2, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number 0-8445

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
(317) 633-4100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act rule 12b-2). Yes [ X ] [ No ]

Number of shares of Common Stock outstanding at August 1, 2003: 27,047,058

The Index to Exhibits is located at Page 16. Total Pages 20

THE STEAK N SHAKE COMPANY

INDEX

Page No.
----------
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Statements of Financial Position as of July 2,
2003 (Unaudited) and September 25, 2003 . . . . . . . . . . . . 3

Condensed Consolidated Statements of Earnings (Unaudited) for the
Twelve and Forty Weeks Ended July 2, 2003 and July 3, 2002 . . . . . 5

Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Forty Weeks Ended July 2, 2003 and July 3, 2002 . . . . . . .6

Notes to Condensed Consolidated Financial Statements (Unaudited). . 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . 10

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . . . 15

ITEM 4. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . 15

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . 16

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE STEAK N SHAKE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

JULY 2, SEPTEMBER 25,
2003 2002
--------------- ---------------
(UNAUDITED)

ASSETS:
CURRENT ASSETS
Cash, including cash equivalents
of $15,670,000 in 2003 and
$3,225,000 in 2002 $ 17,666,338 $ 5,286,311
Short term investments 440,000 611,092
Receivables, net 3,635,681 2,955,049
Inventories 5,632,090 5,206,161
Deferred income taxes 2,764,000 2,764,000
Other current assets 945,557 1,805,111
--------------- ---------------
Total current assets 31,083,666 18,627,724
--------------- ---------------

PROPERTY AND EQUIPMENT
Land 134,549,738 128,354,629
Buildings 131,383,594 125,113,260
Leasehold improvements 91,361,393 86,764,055
Equipment 141,533,465 134,277,901
Construction in progress 5,870,131 11,995,758
--------------- ---------------
504,698,321 486,505,603
Less accumulated depreciation
and amortization (140,773,469) (126,783,897)
--------------- ---------------
Net property and equipment 363,924,852 359,721,706
--------------- ---------------

NET LEASED PROPERTY 3,801,276 4,079,558

OTHER ASSETS
Long term investments 5,001,280 9,996,281
Other assets 4,740,493 2,035,683
Intangible assets 1,342,112 1,434,037
--------------- ---------------
Total other assets 11,083,885 13,466,001
--------------- ---------------
$ 409,893,679 $ 395,894,989
=============== ===============
See accompanying notes

JULY 2, SEPTEMBER 25,
2003 2002
--------------- ---------------
(UNAUDITED)

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
Accounts payable $ 14,819,329 $ 14,695,102
Accrued expenses 29,952,720 28,387,780
Current portion of senior note 5,321,984 3,960,317
Current portion of obligations
under capital leases 3,363,030 3,248,277
--------------- ---------------
Total current liabilities 53,457,063 50,291,476
--------------- ---------------
DEFERRED INCOME TAXES 5,020,000 5,062,000

DEFERRED CREDITS 127,779 537,138

OBLIGATIONS UNDER
CAPITAL LEASES 145,049,899 148,531,256

SENIOR NOTE 21,239,444 24,418,571

SHAREHOLDERS' EQUITY
Common stock -- $.50 stated value
50,000,000 shares authorized --
shares issued: 30,332,839 in 2003;
30,332,839 in 2002 15,166,420 15,166,420
Additional paid-in capital 123,334,412 123,334,412
Retained earnings 84,504,751 67,175,420
Less: Unamortized value of
restricted shares . . . . (274,373) (324,374)
Treasury stock -- at cost
3,288,708 shares in 2003;
3,374,606 shares in 2002. (37,731,716) (38,297,330)
--------------- ---------------
Total shareholders' equity. . . . . . . 184,999,494 167,054,548
--------------- ---------------
<FN>
$409,893,679 $395,894,989
============ ============
See accompanying notes

THE STEAK N SHAKE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

TWELVE FORTY
WEEKS ENDED WEEKS ENDED
-------------------------- --------------------------

JULY 2, JULY 3, JULY 2, JULY 3,
2003 2002 2003 2002
------------ ------------ ------------ ------------

REVENUES
Net sales $120,348,440 $107,514,013 $370,168,267 $346,640,039
Franchise fees 920,086 898,704 2,827,188 2,808,698
Other - net 412,903 505,072 1,391,040 1,322,917
------------ ------------ ------------ ------------
121,681,429 108,917,789 374,386,495 350,771,654
------------ ------------ ------------ ------------

COSTS AND EXPENSES
Cost of sales 27,579,047 24,841,922 84,272,813 80,575,826
Restaurant operating costs 58,454,340 51,434,884 183,472,715 169,157,884
General and administrative 9,190,225 7,940,490 29,009,387 26,447,351
Depreciation and amortization 5,754,506 5,367,233 18,340,713 17,352,218
Marketing 4,270,375 3,732,115 14,135,871 12,247,277
Interest 3,365,812 3,364,261 10,104,444 10,222,240
Rent 1,632,562 1,654,768 6,584,082 6,443,950
Pre-opening costs 375,196 383,242 1,462,376 1,492,441
------------ ------------ ------------ ------------
110,622,063 98,718,915 347,382,401 323,939,187
------------ ------------ ------------ ------------

EARNINGS BEFORE INCOME TAXES 11,059,366 10,198,874 27,004,094 26,832,467

INCOME TAXES 3,970,000 3,687,500 9,674,000 9,690,500
------------ ------------ ------------ ------------

NET EARNINGS $ 7,089,366 $ 6,511,374 $ 17,330,094 $ 17,141,967
============ ============ ============ ============

NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Basic $ .26 $ .23 $ .64 $ .61
Diluted $ .26 $ .23 $ .64 $ .61

WEIGHTED AVERAGE SHARES AND EQUIVALENTS:
Basic 27,030,336 27,802,589 26,997,199 27,975,915
Diluted 27,178,997 28,029,028 27,059,148 28,147,467
<FN>

See accompanying notes

THE STEAK N SHAKE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

FORTY WEEKS ENDED
----------------------------

JULY 2, JULY 3,
2003 2002
------------- -------------

OPERATING ACTIVITIES
Net earnings $ 17,330,094 $ 17,141,967
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 18,340,713 17,352,218
Provision for deferred income tax (42,000) (1,313,500)
Changes in receivables and inventories (1,106,561) (593,533)
Changes in other assets (1,850,260) (237,727)
Changes in accounts payable
and accrued expenses 2,059,205 7,907,083
Loss on disposals of property and equipment 508,711 174,654
------------- -------------
Net cash provided by operating activities 35,239,902 40,431,162
------------- -------------

INVESTING ACTIVITIES
Additions of property and equipment (23,944,266) (27,687,487)
Proceeds from sale of short-term investments 171,092 3,500,000
Purchase of short-term investments (528,641)
Purchase of long-term investments (10,000,000)
Proceeds from long-term investments called 5,000,000
Net proceeds from disposals of property and
Equipment 745,749 1,418,101
------------- -------------
Net cash used in investing activities (18,027,425) (33,298,027)
------------- -------------

FINANCING ACTIVITIES
Principal payments on lease obligations (3,366,604) (899,789)
Principal payments on long-term debt (1,817,460) (1,817,460)
Proceeds from equipment and property leases 13,461,567
Proceeds from exercise of stock options 85,419 120,975
Proceeds from employee stock purchase plan 1,254,634 1,049,275
Treasury stock repurchases (988,439) (10,075,836)
------------- -------------
Net cash provided by (used in) financing activities (4,832,450) 1,838,732
------------- -------------

INCREASE IN CASH AND CASH EQUIVALENTS 12,380,027 8,971,867

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,286,311 8,715,136
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,666,338 $ 17,687,003
============= =============
<FN>

See accompanying notes

THE STEAK N SHAKE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and notes required by generally accepted
accounting principles for complete financial statements.

In the opinion of the Company, all adjustments considered necessary to
present fairly the consolidated financial position as of July 2, 2003, the
consolidated statements of earnings for the twelve and forty weeks ended July 2,
2003 and July 3, 2002, and the consolidated statements of cash flows for the
forty weeks ended July 2, 2003 and July 3, 2002 have been included.

The consolidated statements of earnings for the twelve and forty weeks
ended July 2, 2003 and July 3, 2002 are not necessarily indicative of the
consoli-dated statements of earnings for the entire year. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended
September 25, 2002.

SEASONAL ASPECTS

The Company has substantial fixed costs which do not decline as a result of
a decline in sales. The Company's first and second fiscal quarters, which
include the winter months, usually reflect lower average weekly unit volumes.
Sales in these quarters can be adversely affected by severe winter weather.

STOCK-BASED COMPENSATION

The Company accounts for its Stock Option and Employee Stock Purchase Plans
under the recognition and measurement principles of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. No stock-based employee compensation is reflected in net
earnings, as all options granted under those plans had an exercise price equal
to the market value of the underlying common stock on the date of grant. The
following table illustrates the effect on net earnings and earnings per share if
the Company had applied the fair value recognition provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.

TWELVE WEEKS ENDED
JULY 2, JULY 3,
2003 2002
------------ ------------

Net earnings as reported $ 7,089,366 $ 6,511,374
Less pro forma compensation expense, net of tax (257,264) (590,674)
------------ ------------
Proforma net earnings $ 6,832,102 $ 5,920,700
============ ============

Basic earnings per share as reported $ .26 $ .23
Pro forma basic earnings per share $ .25 $ .21

Diluted earnings per share as reported $ .26 $ .23
Pro forma diluted earnings per share $ .25 $ .21

FORTY WEEKS ENDED
JULY 2, JULY 3,
2003 2002
------------ ------------

Net earnings as reported $17,330,094 $17,141,967
Less pro forma compensation expense, net of tax (766,186) (1,322,022)
------------ ------------
Proforma net earnings $16,563,908 $15,819,945
============ ============

Basic earnings per share as reported $ .64 $ .61
Pro forma basic earnings per share $ .61 $ .57

Diluted earnings per share as reported $ .64 $ .61
Pro forma diluted earnings per share $ .61 $ .56

FINANCIAL INSTRUMENTS

The fair value of cash and cash equivalents and short term investments
approximate their carrying value due to their short-term maturities. Long-term
investments consist principally of government debt securities that management
has the intent and ability to hold until maturity. These securities, which
mature in five years, are carried at amortized cost, which approximates fair
market value.

EARNINGS PER SHARE

Earnings per share of common stock is based on the weighted average number
of shares outstanding during the year. The following table presents a
reconciliation of the basic and diluted weighted average common shares as
required by SFAS No. 128, Earnings Per Share:

TWELVE WEEKS ENDED FORTY WEEKS ENDED

JULY 2, JULY 3, JULY 2, JULY 3,
2003 2002 2003 2002
---------- ---------- ---------- ----------

Basic earnings per share:
Weighted average common shares 27,030,336 27,802,589 26,997,199 27,975,915
Diluted earnings per share:
Weighted average common shares 27,030,336 27,802,589 26,997,199 27,975,915
Diluted effect of stock options. 148,661 226,439 61,949 171,552
---------- ---------- ---------- ----------
Weighted average common
and incremental shares . . . 27,178,997 28,029,028 27,059,148 28,147,467
========== ========== ========== ==========

Options to purchase 767,446 and 580,942 shares of common stock were excluded
from the calculations of diluted earnings per share for the twelve weeks ended
July 2, 2003 and July 3, 2002, respectively, as the options' exercise prices
were greater than their fair values. Options to purchase 1,053,363 and 551,189
shares of common stock were excluded from the calculation of diluted earnings
per share for the forty weeks ended July 2, 2003 and July 3, 2002, respectively,
as the options' exercise prices were greater than their fair values.

INTANGIBLE ASSETS

Intangible assets subject to amortization pursuant to SFAS No. 142,
Goodwill and Other Intangible Assets, consist of "a right to operate" and is
summarized below:

JULY 2, 2003 SEPTEMBER 25, 2002
------------ -------------------
Gross carrying amount $1,480,000 $1,480,000
Less accumulated amortization (137,888) (45,963)
----------- ------------
Net intangible assets $1,342,112 $1,434,037
========== ==========

Amortization expense for the twelve weeks and forty weeks periods was
$27,578 and $91,925, respectively. Annual amortization expense for each of the
next five fiscal years is estimated to be approximately $119,500.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which
nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. SFAS No. 146 is
effective for exit and disposal activities that are initiated after December
31, 2002. The adoption of this statement did not have a material effect on the
consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of SFAS No. 5,
57, and 107 and the rescission of FASB Interpretation No. 34. FIN 45 clarifies
the requirements of SFAS No. 5, Accounting for Contingencies, relating to a
guarantor's accounting for, and disclosure of, the issuance of certain types of
guarantees. The disclosure requirements in this interpretation are effective
for financial statements of interim and annual periods ending after December 15,
2002. The adoption of the recognition and measurement provisions of this
statement did not have a material effect on the consolidated financial
statements.

In November 2002, the EITF reached a consensus on EITF 02-16, Accounting by
a Reseller for Cash Consideration Received from a Vendor. EITF 02-16 addresses
the classification of cash consideration received from vendors in a reseller's
consolidated financial statements. The guidance related to income statement
classification is to be applied in annual and interim financial statements for
agreements entered into, or modifications of existing agreements, after January
1, 2003. The adoption of this statement did not have a material effect on the
consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, which amends SFAS No. 123, Accounting
for Stock-Based Compensation, to provide alternative methods for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements of the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The new
disclosure requirements of this statement are included in the consolidated
financial statements.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an interpretation of ARB 51. The
primary objective of FIN 46 is to provide guidance on the identification and
consolidation of variable interest entities, or VIE's, which are entities for
which control is achieved through means other than through voting rights. The
adoption of this statement did not have a material effect on the consolidated
financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

In the following discussion, the term "same store sales" refers to the
sales of only those units open eighteen months as of the beginning of the
current fiscal period being discussed and which remained open through the end of
the fiscal period.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to use its judgement to make estimates and assumptions that can have
a material impact on the results of operations and reported amounts of assets
and liabilities. The Company evaluates its assumptions and estimates on an
ongoing basis based on historical experience and various other factors that are
believed to be relevant under the circumstances. Actual results may differ from
these estimates under different assumptions or conditions.

The Company believes that of its significant accounting policies, the
following policies involve a higher degree of risk, judgement and/or complexity.

Property and Equipment

Property and equipment are recorded at cost with depreciation and
amortization being recognized on the straight-line method over the estimated
useful lives of the assets (15 to 25 years for building and land improvements, 5
to 10 years for restaurant equipment, and the shorter of the estimated useful
lives on improvements or the lease term for leasehold improvements). The
Company reviews each restaurant for impairment when events or circumstances
indicate it might be impaired. The Company tests for impairment by comparing
the carrying value of the asset to the future cash flows expected to be
generated by the asset. If the total future cash flows are less than the
carrying amount of the asset, the carrying amount is written down to the
estimated fair value, and a loss is recognized in earnings.

Revenue Recognition

The Company records revenues from restaurant sales upon performance of
services. Revenues from franchise and development fees are recorded when the
related restaurant begins operations. Royalty fees based on franchise sales are
recognized as revenue in the month earned based on the accrual basis of
accounting. Gift certificate revenues are deferred until the certificates are
redeemed at the restaurants upon performance of services.

Insurance Reserves

The Company self-insures a significant portion of expected losses under its
workers' compensation, general liability, and auto liability insurance programs.
The Company purchases reinsurance for individual and aggregate claims that
exceed predetermined limits. The Company records a liability for all unresolved
claims and its estimate of incurred but not reported claims at the anticipated
cost to the Company. The liability estimate is based on information received
from third party administrators and insurance companies, combined with
management's judgments regarding frequency and severity of claims, claims
development history and settlement practices.

Income Taxes

The Company records deferred tax assets or liabilities based on differences
between financial reporting and tax bases of assets and liabilities using
currently enacted rates and laws that will be in effect when the differences are
expected to reverse. Management records deferred tax assets to the extent it
believes there will be sufficient future taxable income to utilize those assets
prior to their expiration. To the extent deferred tax assets will be unable to
be utilized, management will record a valuation allowance against the
unrealizable amount, and record that amount as a charge against earnings.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationship to total revenues,
unless otherwise indicated, of items included in the Company's consolidated
statements of earnings for the periods indicated:

TWELVE FORTY
WEEKS ENDED WEEKS ENDED
---------------- ---------------
7/2/03 7/3/02 7/2/03 7/3/02
------ ------ ------ ------

REVENUES
Net sales 98.9% 98.7% 98.9% 98.8%
Franchise fees 0.8 0.8 0.7 0.8
Other, net 0.3 0.5 0.4 0.4
------- ------- ------- -------
100.0 100.0 100.0 100.0

COSTS AND EXPENSES
Cost of sales 22.9(1) 23.1(1) 22.8(1) 23.2(1)
Restaurant operating costs 48.6(1) 47.8(1) 49.6(1) 48.8(1)
General and administrative 7.6 7.3 7.7 7.5
Depreciation and amortization 4.7 4.9 4.9 4.9
Marketing 3.5 3.4 3.8 3.5
Interest 2.8 3.1 2.7 2.9
Rent 1.3 1.5 1.8 1.8
Pre-opening costs 0.3 0.4 0.4 0.4
------- ------- ------- -------
90.9 90.6 92.8 92.4

EARNINGS BEFORE INCOME TAXES 9.1 9.4 7.2 7.6

INCOME TAXES 3.3 3.4 2.6 2.8
------- ------- ------- -------
NET EARNINGS 5.8% 6.0% 4.6% 4.9%
======= ======= ======= =======
<FN>
(1) Cost of sales and restaurant operating costs are expressed as a percentage
of net sales.

COMPARISON OF TWELVE WEEKS ENDED JULY 2, 2003 TO TWELVE WEEKS ENDED JULY 3, 2002

Revenues

Net sales increased $12,834,000 (11.9%) to $120,348,000 due to an 8.0%
increase in same store sales and a 4.7% increase in the number of
Company-operated Steak n Shake restaurants. The 8.0% increase in same store
sales reflects significant improvement over the same period in the prior year in
which same store sales decreased 1.9%. This improvement is primarily attributed
to strong shake sales from increased promotional marketing combined with the
acceptance of credit cards late in the first quarter of this fiscal year and
commencement of television advertising in six additional markets. Also
impacting same store sales was a 2.1% increase in check average, and a 5.9%
increase in customer counts. The increase in check average results primarily
from a 1.15% weighted average menu price increase compared to the same period in
the prior year and the acceptance of credit cards. The number of
Company-operated Steak n Shake restaurants increased to 358 at July 2, 2003,
compared to 343 at July 3, 2002.

Costs and Expenses

Cost of sales increased $2,737,000 (11.0%) to $27,579,000 primarily due to
increased net sales. Cost of sales as a percentage of net sales decreased to
22.9% from 23.1%, primarily as a result of menu price increases and decreases in
beef and dairy costs compared to the same period in the prior year.

Restaurant operating costs increased $7,019,000 (13.6%) to $58,454,000 due
to increased net sales and an increased number of Company-operated Steak n Shake
restaurants. Restaurant operating costs as a percentage of net sales increased
to 48.6% from 47.8%, primarily due to credit card processing fees which were not
incurred in the same period in the prior year, an increase in field management
incentive bonuses resulting from increased same store sales, and increases in
most lines of insurance due to market conditions.

General and administrative expenses increased $1,250,000 (15.7%) to
$9,190,000, and as a percentage of revenue increased to 7.6% from 7.3% in the
same period in the prior year. The increase in general and administrative
expenses is attributable to incremental investments in consumer research,
mystery shopping, training, and new market development.

Depreciation and amortization expense increased $388,000 (7.2%) to
$5,755,000 principally from property and equipment additions due to opening new
Company-operated Steak n Shake restaurants.

Marketing expense increased $538,000 (14.4%) to $4,270,000, and as a
percentage of revenue increased to 3.5% from 3.4% in the same period in the
prior year. The increase is primarily attributable to additional television
marketing in the Jacksonville, Mobile, Lexington and Zanesville markets,
combined with increased promotional marketing.

Pre-opening costs remained consistent with the prior year primarily due to
the opening of three new Company-operated Steak n Shake restaurants in both
periods.

Income Taxes

The Company's effective income tax rate decreased to 35.9% from 36.2% in
the same period in the prior year, primarily due to lower state income taxes.

Net Earnings

Net earnings for the period were $7,089,000 ($.26 per diluted share)
compared to $6,511,000 in the same period in the prior year, primarily due to
the items listed above.

COMPARISON OF FORTY WEEKS ENDED JULY 2, 2003 TO FORTY WEEKS ENDED JULY 3, 2002

Revenues

Net sales increased $23,528,000 (6.8%) to $370,168,000 due to a 2.4%
increase in same store sales and a 4.8% increase in the number of
Company-operated Steak n Shake restaurants. The sales improvement is due
primarily to system-wide acceptance of credit cards in the first quarter of the
current fiscal year, combined with increased television and promotional
marketing. Also impacting same store sales was a 1.8% increase in check
average, and a 0.6% increase in customer counts. The increase in check average
results primarily from a 1.30% weighted average menu price increase compared to
the same period in the prior year and the acceptance of credit cards. The
number of Company-operated Steak n Shake restaurants increased to 358 at July 2,
2003 from 343 at July 3, 2002.

Costs and Expenses

Cost of sales increased $3,697,000 (4.6%) to $84,273,000 primarily due to
increased net sales. Cost of sales as a percentage of net sales decreased to
22.8% from 23.2%, as a result of menu price increases and decreases in beef and
dairy costs compared to the same period in the prior year.

Restaurant operating costs increased $14,315,000 (8.5%) to $183,473,000 due
to increase sales. Restaurant operating costs as a percentage of net sales
increased to 49.6% from 48.8%, primarily due to credit card processing fees not
being incurred in the prior year and higher insurance costs due to market
conditions.

General and administrative expenses increased $2,562,000 (9.7%) to
$29,009,000, and as a percentage of revenue increased to 7.7% from 7.5% in the
same period in the prior year. The increase in general and administrative
expenses is attributable to increased staffing and training to support new and
growing markets, and incremental investments in consumer research, mystery
shopping, and training.

Rent expense in the current period remained relatively consistent with the
same period in the prior year.

Depreciation and amortization expense increased $989,000 (5.7%) to
$18,341,000 principally from property and equipment additions due to opening new
Company-operated Steak n Shake restaurants.

Marketing expense increased $1,889,000 (15.4%) to $14,136,000, and as a
percentage of revenue increased to 3.8% from 3.5% in the same period in the
prior year. The increase is primarily attributable to additional television
marketing in several key Midwestern and Southeastern markets, combined with
increased promotional marketing.

Pre-opening costs remained consistent with the prior year primarily due to
the opening of twelve new Company-operated Steak n Shake restaurants in both
periods.

Income Taxes

The Company's effective tax rate decreased to 35.8% from 36.1% in the same
period in the prior year, primarily due to lower state income taxes.

Net Earnings

Net earnings for the period were $17,330,000, ($.64 per diluted share),
compared to $17,142,000 in the same period in the prior year, primarily due to
the items listed above.

The Company is currently reviewing the operations of each of its stores and
believes it is possible that between six and twelve stores could be closed at
some point in the future. No decision has yet been made on any closings.

LIQUIDITY AND CAPITAL RESOURCES

Twelve Steak n Shake restaurants, including one franchised Steak n Shake
restaurant, were opened during the forty weeks ended July 2, 2003. Four Steak n
Shake restaurants are currently under construction. For the forty weeks ended
July 2, 2003, capital expenditures totaled $23,944,000 as compared to
$27,687,000 for the same period in the prior year.

The Company expects to open two Company-operated Steak n Shake restaurants
in the fourth quarter of fiscal year 2003, and fifteen Company-operated Steak n
Shake restaurants in fiscal year 2004. This level of expansion allows management
to build field organizational quality while continuing its focus on improving
each and every guest experience through hospitality initiatives, especially in
newer markets; improving the depth of the field organization through improved
recruitment and higher retention; enhancing training and staff development; and
aggressively marketing the brand through unique differentiation marketing. The
average cost of a new Company-operated Steak n Shake restaurant, including land,
site improvements, building and equipment approximates $1,700,000. The Company
intends to fund capital expenditures, and meet working capital needs using
existing resources and anticipated cash flows from operations.

During the forty weeks ended July 2, 2003, cash provided by operations
totaled $35,240,000, while cash generated from disposals of property totaled
$746,000. In addition, proceeds from long-term investments called generated
$5,000,000. During the forty weeks ended July 3, 2002, cash provided by
operations totaled $40,431,000, while cash generated by disposals of property
totaled $1,418,000. Additionally, the Company sold $3,500,000 of short-term
investments and purchased $10,000,000 of five-year government bonds and $529,000
of short-term investments.

Net cash used in financing activities for the forty weeks ended July 2,
2003, totaled $4,832,000 compared to providing $1,839,000 in the comparable
prior period due to $13,462,000 of proceeds from sale/leaseback transactions in
the prior year that did not occur in the current year. Additionally, the
Company repurchased $10,076,000 of its common shares during the forty weeks
ended July 3, 2002, compared to purchases of $988,000 in the forty weeks ended
July 2, 2003.

As of July 2, 2003, the Company had outstanding borrowings of $26,561,000
under its Senior Note Agreement and Private Shelf Facility ("Senior Note
Agreement") and $75,000,000 of additional borrowing availability. Borrowings
under the Senior Note Agreement bear interest at an average fixed rate of 7.6%.
At July 3, 2002, the Company had outstanding borrowings of $30,522,000.

The Company maintains a $30,000,000 Revolving Credit Agreement ("Revolving
Credit Agreement") that bears interest based on LIBOR plus 75 basis points, or
the prime rate, at the election of the Company, and matures in January 2005.
There were no borrowings under the Revolving Credit Agreement at July 2, 2003 or
July 3, 2002. The Company's debt agreements contain restrictions which, among
other things, require the Company to maintain certain financial ratios.

The Company has a stock repurchase program that allows the purchase of up
to 4,000,000 shares of its outstanding common stock. During the forty weeks
ended July 2, 2003, the Company repurchased a total of 98,800 shares at a cost
of $988,000. The Company has purchased a total of 3,376,689 shares at a cost of
$36,242,000 under the program since inception. The repurchased shares will be
used in part to fund the Company's Stock Option Plan, Capital Appreciation Plan
and Employee Stock Purchase Plan.

EFFECTS OF GOVERNMENTAL REGULATIONS AND INFLATION

Since most of the Company's employees are paid hourly rates related to federal
and state minimum wage laws, increases in the legal minimum wage directly
increase the Company's operating costs. Inflation in food, labor and other
operating costs directly affects the Company's operations.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 146, Accounting for
Costs Associated with Exit or Disposal Activities, which nullifies Emerging
Issues Task Force ("EITF") Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. SFAS No. 146 is effective for exit and disposal
activities that are initiated after December 31, 2002. The adoption of this
statement did not have a material effect on the consolidated financial
statements.

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

Certain statements contained in this report, particularly information
regarding future economic performance, finances, plans, and management
objectives is forward-looking. These statements use such words as "may",
"will", "expect", "believe", "plan", and other similar terminology. These
statements reflect management's current expectations regarding future events and
operating performance and speak only as of the date of this report.
Forward-looking statements involve a number of risks and uncertainties that
could cause actual results to differ materially from those expressed in the
forward-looking statements, such as the following: effectiveness of operating
initiatives; changes in economic conditions; effectiveness of advertising and
marketing initiatives; harsh weather conditions, primarily in the first and
second quarters; availability and cost of qualified restaurant personnel;
changes in consumer tastes; changes in minimum wage rates; and changes in
applicable accounting policies and practices. The foregoing list of important
factors is not intended to be all-inclusive.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure with regard to financial
instruments is to changes in interest rates. Pursuant to the terms of the
Senior Note Agreement, the Company may from time to time issue notes in
increments of at least $5,000,000. The interest rate on the notes is based upon
market rates at the time of the borrowing. Once the interest rate is
established at the time of the initial borrowing, the interest rate remains
fixed over the term of the underlying note. The Revolving Credit Agreement
bears interest at a rate based upon LIBOR plus 75 basis points or the prime
rate, at the election of the Company. Historically, the Company has not used
derivative financial instruments to manage exposure to interest rate changes.
At July 2, 2003, a hypothetical 100 basis point increase in short-term rates
would have an immaterial impact on the Company's earnings.

ITEM 4. CONTROLS AND PROCEDURES

Based on an evaluation of the Company's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(c)) as of July 2, 2003,
the Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures are effective in timely
alerting the Company's management to material information required to be
included in this Form 10-Q and other Exchange Act filings. There have been no
changes in the Company's internal controls over financial reporting that
occurred during the quarter ended July 2, 2003 that have materially affected, or
are reasonably likely to materially affect, the Company's internal control over
financial reporting.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

31.1 Rule 13a - 14(a) / 15d -14(a) Certification of Chief Executive
Officer.

31.2 Rule 13a - 14(a) / 15d -14(a) Certification of Chief Financial
Officer.

32 Section 1350 Certifications

(b) Reports on Form 8-K.
----------------------

A report on Form 8-K was filed on May 9, 2003 under Item 12 announcing
second quarter fiscal 2003 results.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on August 15, 2003.

THE STEAK N SHAKE COMPANY
(Registrant)

/s/ James W. Bear
---------------------
By James W. Bear
Senior Vice President
On Behalf of the Registrant and as
Chief Financial Officer

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002

I, Alan B. Gilman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Steak n Shake
Company;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: August 15, 2003

/s/ Alan B. Gilman
---------------------
Alan B. Gilman
Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002

I, James W. Bear, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Steak n Shake
Company;

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: August 15, 2003

/s/ James W. Bear
-------------------
James W. Bear
Senior Vice President and
Chief Financial Officer

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Steak n Shake Company (the
"Company") on Form 10-Q for the period ending July 2, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), each of
the undersigned certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to
906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

/s/ Alan B. Gilman
- ------------------------
Alan B. Gilman, Chief Executive Officer
August 15, 2003

/s/ James W. Bear
- ------------------------
James W. Bear, Senior Vice President and
Chief Financial Officer
August 15, 2003