Why the Classic Steakhouse Still Reigns in America
Restaurant fads arrive almost daily these days. Ramen and Asian fusion are in, restaurant kiosks proliferate, and tablet eateries, executed without servers, are spiking, and The New Yorker recently profiled a “pan-Soviet fusion” eatery located in, where else, Brooklyn? But there’s one trusty standby that never seems to fade: the classic steakhouse.
Peter Luger Steakhouse, Gallaghers Steakhouse, and Smith & Wollensky in New York, Mastro’s Steakhouse and Michael Jordan’s Steakhouse in Chicago, Nick and Stef’s Steakhouse in Los Angeles, and Okeechobee Steakhouse in West Palm Beach, Florida, are just a handful of steakhouses that are thriving. Texas Roadhouse and LongHorn Steakhouse are also flourishing amid a challenging backdrop for casual dining.
But some mid-priced steak chains are feeling the heat of stagnant or declining revenue, just as casual dining chains Applebee’s and Ruby Tuesday are. For example, in November, Outback Steakhouse reported its first quarter of improved traffic since 2016. And it was 0.1 percent.
After a decade where meat consumption plummeted 15 percent in the country, USA Today in July reported that Americans consumed 56.6 pounds of beef in 2016, up from 54 pounds in 2015. It attributed the spike to “low prices, strong disposable incomes,” and some backlash against the healthy warnings urging reduced meat eating.
Many steakhouses have sustained a steady clientele because “in spite of health concerns, people are still consuming what they enjoy,” says Tim Howes, associate professor in the graduate program at Johnson & Wales University in Providence, Rhode Island. People have known for many years “they should be eating vegetables and moving away from processed meats, but people still enjoy a good steak,” he says.
Moreover, steakhouses do a very effective job of attracting business people. “It’s a gathering place for people who are doing deals and making impressions,” Howes says. And they’ve become a destination for special occasions, anniversaries, birthdays, and milestones.
Steakhouses also offer a fine-dining experience that transcends the service guests receive at a casual-dining spot. In New York City, for example, at Gallaghers Steakhouse and Peter Luger Steakhouse, customers are paying for a “level of professional care and service that you don’t get at Applebee’s. You’re buying theatre,” Howes says.
But most steakhouses need to do a better job of appealing to a wider clientele than business people. “Steakhouses have to tone down the male testosterone and offer healthier items including chicken and vegan options,” Howes says.
Some steakhouses are even offering deals to widen their appeal. At select Ruth’s Chris Steak Houses, the bar area offers a prix fixe meal of an appetizer, steak, and desert for $50. At the tables, most steaks alone cost about $45. It’s attracting a different clientele by offering a discount and still maintaining higher price point at most tables, Howes says.
Adapting to changing consumer tastes is paramount. Outback Steakhouse, Howes says, “didn’t keep its eye on the ball and consumers got bored with it.”
New York City attorney Nate Read says he still craves the steakhouse experience, despite watching his weight and being nutritious-conscious. He gravitates to steakhouses because “the best of them serve a substantially better steak than most generally focused restaurants and light years beyond anything I could make at home.”
“I don’t eat a ton of steak but when I do I’m so happy that it’s worth the risk to me,” he says. “I can have a fully and absolutely satisfying meal at a great steakhouse—and not eat any carbs.”
Read would still like to see steakhouses eliminate the men’s club vibe, which should have been taken out long ago, and supplement the menu with fish options.
At Okeechobee Steakhouse in West Palm Beach, which seats 188 guests who pay an average $80 dinner tab, owner Ralph Lewis says, “Year in and year out, steak is still America’s most popular food of choice. If they celebrate and go out to dinner, steak is a mainstay.”
And that appeal hasn’t changed for 70 years since Okeechobee Steakhouse was launched as a drive-in by Lewis’s grandparents. What also hasn’t changed is the hospitality that it specializes in. “We try to make our guests feel as if they’ve just met their long-long cousins,” he says.
Its specialties include two dry aging rooms, one wet aging room, and a trademarked Palm Beach Sirloin. And its target audience is mostly professionals—bankers, lawyers, and politicians—who also frequent its power lunches.
The restaurant also holds monthly Women, Whiskey, and a Chef four-course dinners attended by about 30 women and served only by female staff. Its VIP program, where guests receive points for each dollar spent, leading to free appetizers or entrées, attracts 30,000 repeat customers. “People like getting something for free,” Lewis says.
To broaden its clientele, the restaurant is opening the 1947 Gourmet Market & Meat Shop in March or April 2018 on an adjacent site to the steakhouse that offers prime meats, sandwiches, prepared foods, and desserts.
While Okeechobee’s offers salads and fish dishes, Lewis is unabashed about targeting meat eaters. “I do nothing to attract vegetarians. I make no excuses and do not apologize for who we are,” he says.
Having both worked at Peter Luger Steakhouse as waiters, brother-in-laws Benjamin Prelvukaj and Benjamin Sinanaj, both of Albanian heritage, joined forces to open Benjamin Steakhouse in Manhattan in 2006. They now have three Benjamin Steakhouses, including one Benjamin Prime in Manhattan, one in White Plains, and one in Tokyo.
The key to their success, Prelvukaj says, is that consumers are increasingly educated about food, so “the quality of food and service and using USDA prime meat makes a big difference.”
While the owners learned a lot about food preparation at Peter Luger’s, at Benjamin Steakhouse they wanted to provide more options than prime steaks. “We have more seafood and more appetizers. So we serve great sea bass, tuna, and black bass and always have lobster,” he says.
“If they’re doing a deal with a vegetarian, how long does it take to make a great vegetarian dish to make sure a client is happy?” Prelvukaj says.
It caters to mostly professionals, bankers, and attorneys weeknights who work in nearby corporate offices of JPMorgan Chase, Bank of America, UBS, Oracle, and PWC. And weekends it attracts more tourists attending Broadway shows.
To appeal to women, the restaurant opened Benjamin Prime, which has a softer, more modernistic decor, with a menu that highlights seafood dishes, appetizers, more salad options, and dishes like Italian Burrata.
Guests may dine out less for red meat than they did a generation ago, but many still crave “dry-aged beef, which breaks the enzymes down,” Prelvukaj says, sounding as if he majored in food chemistry.
But Prelvukaj knows steakhouse owners have to remain primed to technological changes. “Because of technology, you can’t fall behind, like Blackberry did. You have to be open, make sure you read, keep track of business, or otherwise, you’ll fail,” he says.
Kent Taylor, founder and CEO of Louisville, Kentucky-based Texas Roadhouse, describes its “secret sauce” as its “partnership program where managing partners receive 10 percent of the profits of the restaurant they run. They have skin in the game, which allows them to feel like owners rather than managers.”
There are currently 546 Texas Roadhouse outlets in 49 states, with about 27 planned to open in 2018.
Taylor also points to its consistency as the other factor in its success. “Our top seller in 1993 was our 6-ounce sirloin. Twenty-four years later it’s still our 6-ounce sirloin,” he says.
Though it’s still a casual dining steakhouse, Texas Roadhouse has made adjustments, such as adding a steakhouse filet salad, chicken, and salmon dishes. But he also notes if it adds an item to the menu, it subtracts another.
And Texas Roadhouse stayed true to its ethos: still closed for lunch weekdays and doesn’t court delivery. “The reason people come to Texas Roadhouse is quality food at a value, and that’s what we focus on,” Taylor says.
Ironically, in an age of smartphones, Okeechobee Steakhouse’s Lewis expects that the steakhouses that thrive in the future will “offer personable service and face-to-face interaction since we’ve become so technical. Steakhouses are classic Americana and people still love that traditional feel.”
Johnson & Wales University’s Howes says that the popularity of steakhouses will endure but offers some warning signs. He says: “Steakhouses are facing the same pressure as other restaurants. The real test will be how they fare if they face another recession. And they have to compete with prepared meals just like the other restaurants.”