Steakhouses Still Sizzling

Popularity among Baby Boomers and seniors and a willingness to expand into other dayparts have kept the steakhouse segment in a prime position compared to other restaurant industry segments.

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iii Forks Steakhouse RibeyeAmerican consumers love their steakhouses. Despite consumers' stated intent to focus on healthful eating and economical dining, this segment continues to thrive.

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Among the 12 fine-dining steak concepts in Technomic's Top 500 Chain Report, sales increased 5.7 percent to $2.3 billion in 2012 compared to 2011. The number of units among these chains increased by less than 1 percent to 446. By comparison, the overall steakhouse segment totaled $15.8 billion in 2012, a 7 percent increase over 2011, and 8,203 units, an increase of 1 percent, Technomic reports.

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"The steakhouse segment has come a long way from its steep declines in the past few years, and is faring better than casual dining overall, which was down 1 percent within the last year," says Bonnie Riggs, restaurant industry analyst for The NPD Group. "What's helping this category is heavy-duty promotions. As a result, deal traffic spurred by promotions is up 12 percent. If it wasn't for these, the category wouldn't be doing as well as it is." NPD also reports an uptick in lunch visits for steakhouses due to more of these concepts being open during the day.

Baby Boomers in general continue to drive growth in the steakhouse segment. According to NPD's data, the average use of steakhouses tends to be 41 percent higher among people 50 to 64 years old. For consumers over 65, the average use of steakhouses for dining out tends to be 53 percent higher than other demographics. "These customers love loyalty programs and senior discounts," Riggs says. "These are the age groups that will drive growth in this segment for the future."

With meat prices at an all-time high, the mid-range and high-end steakhouse chains now promote smaller, more affordable portions to help increase sales. "Promotions will remain important, as prices will have to be increased due to record-high beef prices," Riggs says. "[In the months ahead], we will see a lot of promotions and marketing of two-item entrées, such as steak with chicken or seafood, to offset high beef prices."

Key Equipment

E&S Considerations

  • Reliability: Because the majority of high-end steakhouses are open only for dinner, any equipment downtime can be disastrous. Units must be durable and reliable to withstand the smaller windows of high-volume use.
  • Flexibility: Because most steakhouse menus offer a variety of other dishes, equipment is typically designated for double- or triple-duty service.
  • Storage: Steakhouses typically utilize dedicated refrigerated storage for meats as well as short-term storage at the cooking line. This requires larger walk-ins as well as reach-ins and/or refrigerated drawers for optimum speed and efficiency.

Case Study: III Forks Steakhouse, Dallas, Texas

Q&A with Tim Murray, co-owner, Murray’s Restaurant, Minneapolis

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