Slideshow: Let them eat steak
CHICAGO – Steakhouses carved a juicy cut of full-service restaurant sales last year.
While top full-service chains posted a 2.4 percent increase in US sales in 2013, the steak segment surged by 6.2 percent, according to Technomic Inc., Chicago. Several factors explain the growth rate, said Mary Chapman, director of product innovation for Technomic.
“Part of it is they declined further than full service overall in 2008-2009, and so year over year, their growth rate was working from a lower base,” Chapman said. “But, that said, year-over-year growth for steaks has been outpacing full-service for a couple of years. Affluent consumers are doing quite well, and even if their spending has been restricted a little bit or even if they’ve chosen to pull back their spending, they’re still willing to spend on a worthwhile experience.”
Top chains in the steak segment offer broad menu variety, standout service and strong beverage programs.
“What these leading chains have done is also offer delicious seafood and fish dishes and pork chops,” Chapman said. “Their menu is so much broader than steak, so they can’t have that veto vote.”
Leading steakhouses in the casual-dining category have introduced limited-time offers and broader beverage options to drive sales. Outback Steakhouse, which led the steak segment in US sales in 2013, and LongHorn Steakhouse, the third top steak chain, “are working on updating their looks and improving their service,” Chapman said. “It seems like both have been trying to do some adult beverage and seasonal specials in an attempt to bring in frequent diners more often and remind lapsed users about the concept.”
LongHorn, a business unit of Darden Restaurants, this year added a happy hour with lower-price drinks and small plates, such as shrimp tacos and kettle chips.
Hospitality is another key feature of leading steakhouses, such as Texas Roadhouse, which claimed the second spot among steakhouses in US sales last year.
“[Texas Roadhouse] is considered a value by consumers, and they have a really strong customer family focus,” Chapman. “They just really take that hospitality really seriously, really consistently.”
Offering a variety of wines, upscale cocktails and craft beers is another way in which steakhouses may stand out.
“Several of the higher-end leaders have a focus on the bar having handcrafted cocktails,” Chapman noted. “Del Frisco’s comes to mind. They have a strong adult beverage focus.”
Several leading concepts target specific consumers and usage occasions. Eddie Merlot’s, for example, aims to engage females with an extensive wine list and bright décor.
“Eddie Merlot’s definitely focuses on attracting women, and even they tend to shoot more towards indulgence positioning: Go out with the girls, and have a glass of wine; here’s some free chocolate,” she said. “The design tends to be lighter and brighter and doesn’t rely on the club kind of feel. They have a nice wine list that has a lot of variety but also a lot of approachable wines. It’s comfortable for a night out with the girls, as well as dates and business meetings and all of the other things steakhouses are great for.”
To boost its business with businesspeople, The Capital Grille, another Darden brand, offers satellite broadcasting in private dining rooms and customized menus for client meetings.
“They also have a bar menu that has appetizers and smaller bites, so you might stop after work with your business associates and have a drink and snack at the bar.”
Though beef prices have hit historically high levels, Chapman doesn’t expect much of an effect on steak’s strong growth.
“If you’re already going to pay $40 for a steak, $44 is not that much of a difference,” she said. “Menu specials can be medallions rather than larger pieces. They could center around pork or lobster or even duck, some other interesting protein, because they vary their menus that much. I think there’s a lot of flexibility [for] consumers concerned about value.”