Raising The Steaks


Customers, new menu items and expansions are helping stoke a meaty rebound

There’s a sizzle in the air these days. Steakhouses are stealing the spotlight with fired-up earnings reports, expansions and hot new menu items that are stoking consumer appetites. They’re even taking over reality television as chefs compete on the current season of Gordon Ramsay’s “Hell’s Kitchen” to win the head chef position at BLT Steak.

This is welcome news, because over the last three years steakhouses were getting burned. In 2008 and 2009, beef sales as a whole were down in both restaurants and grocery stores. Despite this dip, the average American still ate almost 60 pounds of beef in 2008, according to the industry newsletter Cattle-Fax, while statistics tabulated by Technomic show that commercial restaurant operators still bought 5.4 billion pounds of beef that year. “People have been loyal to their protein purchases,” says Russell Woodward, senior manager for product marketing at the Texas Beef Council. Though beef took a hit overall, it remained the top selling protein in restaurants, according to a study by Technomic.

That downturn reversed last year, and the reversal continues in 2011, according to stats provided by the Texas Beef Council. In 2010, steak sales were up by 34 million pounds to 1.2 billion pounds. Though this represents only 15 percent of all beef sales by weight, steak remains the industry’s biggest earner by bringing in almost $10.1 billion. The price per pound of beef has seen a rebound as well. “Prices declined during the Great Recession,” Woodward says. “But they’ve stutter-stepped back up. As things start to improve, steak is coming back in vogue; people are rediscovering it in different ways.”

This renewed interest is visible at several high-profile steakhouse chains, which have seen their revenues rise in 2011, despite an overall dip in restaurant sales. In July, Morton’s posted increased earnings for the first half of the year, up 10.1 percent from sales in the same six-month period last year. The restaurant chain took in $160.5 million, which was an increase from $145.8 million during the same period in 2010. Ruth’s Chris Steak House saw an increase of 5.8 percent in sales, which took them up to $92.6 million from $88.4 million in revenue.

OSI Restaurant Partners, which owns Outback Steakhouse, as well as several other properties, saw a 4.2 percent increase during the second quarter of 2011 when compared with the same period last year. The partnership’s revenue rose to $955.5 million from $917 million. This is particularly striking considering that only two years ago OSI posted a $54 million loss for 2009.

These rosy numbers can partly be attributed to the 2011increase in business travel, which boosts the flow of expense account dollars. Steakhouses have long been a client-friendly dining option for business travelers, so they may have seen a disproportionately larger improvement in their bottom lines. It’s not just sales that are growing. Several high-profile steakhouse chains are expanding their holdings. This year Sizzler is opening two new locations in continental U.S. and a third in Puerto Rico, which mark the first new openings by the chain in four years. LongHorn Steakhouse is also staking some new claims. Between the end of May 2010 and the same time this year, the chain opened 23 new locations around the country. Its sister chain, The Capital Grille, opened four new locations around the country as well.


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