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THE PALM RESTAURANTS

Raising The Steaks

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Customers, new menu items and expansions are helping stoke a meaty rebound
By Nevin Martell September 2011

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.

Boutique steakhouses aren’t letting themselves be smoked by the big boys. New York City’s Old Homestead Steakhouse, which has been in business for over a century, recently unveiled plans to open a location out west in Las Vegas’ Caesar’s Palace by the end of the year. And former Chicago Bulls star Michael Jordan already has a pair of steakhouses with his name on them, in New York City’s Grand Central Terminal and at the Mohegan Sun casino in Connecticut. The NBA legend recently returned to his roots by opening a third location in Chicago; other outlets may be on the horizon.

Booming interest in the steakhouse experience has been coupled with a surging curiosity from guests about artisanal options. Diners are paying attention to where ingredients come from, who produced them and under what conditions. “They’re very food-smart,” says BLT Steak executive chef Victor Albisu, who runs the Washington branch of the popular high-end steakhouse chain. “You can’t compare a diner from 10 years ago to one today.”

Concerned consumers are often first interested in the sourcing of the beef. “Our supplier” is neither specific nor sexy enough an answer for today’s diner. Patrons aren’t just looking for a pinpointed origin; they’re also looking for a story and a singularity that sets their dining experience apart from others. “People are interested in new kinds of flavor and social responsibility,” Woodward says. “This has opened up the possibilities for steakhouses looking to expand their offerings.”


Adam Sobel of Bourbon Steak
credit: Yacouba Tanou

Adam Sobel, the executive chef of Michael Mina’s Bourbon Steak in Washington, serves steers from a number of small local farms, including Gryffon’s Aerie in Virginia and Pennsylvania’s Four Story Hill Farm. “Not everything has to come from commodity farms,” he says. “It can come from small producers that are doing it the right way.”

Diners have heard a lot of terms bandied about in the media in recent years for boutique meats, and one of the most buzzed about products is grass-fed beef. This means the cows have been fed primarily grass, rather than corn or other feeds, which directly affects the meat’s flavor, look and consistency. “It’s a lot leaner, there’s less marbling, it has more of a pinkish hue, and you can taste the grass on the beef,” Sobel says. “On the other hand, corn-fed beef is sweeter, juicer and fattier.”

Though diners might intellectually enjoy the idea of cows roaming free in pastures feeding on natural grasses, they still have to overcome their longtime love affair with corn-fed beef. “People want it all, so they want grass-fed to taste like Kobe,” Albisu says. “It’s not going to be that way.” Though he supports the idea of grass-fed beef, uses it in his restaurant and has even taught classes about how to cook with it, Albisu doesn’t prefer it himself. “When I do blind taste tests, I still gravitate towards grain-fed beef,” he admits. “That’s what I grew up on.”


The Palm Restaurants' corporate executive chef Tony Tammero.
credit: The Palm Restaurants

Restaurants don’t have to commit to a product that embraces only one of these feeding techniques. The Palm Restaurants serve beef that has been grain-fed for 90 days and then grazed for 30 days. “You need that time on grain to get the fat and the marbling,” says the restaurant’s corporate executive chef, Tony Tammero.

No matter what the cows are being fed, knowing the feeding schedule is key. “Sometimes ranchers rush the animals, and they’re on a tight schedule for slaughter,” Sobel says. “We steer clear from those animals because the flavor suffers.”

Whether diners ultimately like the taste of grass-fed might come down to their ability to differentiate between the kinds of beef available and celebrate those variances. Carrie Oliver founded the Artisan Beef Institute in 2007 after she started hunting for the perfect steak, but had a hard time consistently buying products that matched her preferences. Even when she enjoyed a fresh-off-the-grill filet, she realized that she didn’t know how to articulate what was happening on her palate. “There was no commonly accepted language for the experience,” she says.

To create a vocabulary that would help diners articulate what they like about beef, Oliver assembled a panel of linguistic experts, vintners, butchers, and chefs. “Beef is like wine,” she says. “There is a lot going on in every bite.” She broke down her newly minted terminology into four categories: texture, mouth-feel, personality, and flavor notes. The texture category includes words like mushy, firm and chewy, while mouth-feel section includes mouthwatering and crusty. For personality, diners are given choices like adventurous, harmonious and unbalanced, while the flavor notes terminology includes grassy, gamy and metallic. “Now there’s a calibrated vocabulary for the experience,” she says. “So diners can truly articulate what’s happening.” Oliver holds beef-tasting dinners around the U.S. and Canada now, giving diners a chance to experience steak in a different way.

So diners are more interested in what they’re eating and their experiences eating it, but what are they ordering? The strongest selling cuts for all three chefs we spoke to are New York strip, filet mignon and rib-eye. However, as chefs begin to branch out by offering more obscure alternative cuts, diners are starting to embrace some previously unfamiliar options. At Bourbon Steak, Sobel spotlights a constantly changing Dealer’s Choice special. “We’ll get in a whole steer, break it down and use more of the obscure cuts,” he says. “One night that might be the London Broil, then eye round, then hanger steak.”

Albisu concurs. “Odd cuts have caught on in my restaurant,” he says. “Hanger steaks sell a lot now. I like it when I see guest trying a flank steak or skirt steak for the first time.” One of his favorite dishes he uses to highlight the lesser-known cuts is the Argentinean-inspired “matambre,” which translates to “hunger killer.” The chef starts by butterflying a flank steak, and then rolls it up with caramelized onions, Manchego cheese and fresh chopped rosemary. “On the outside, the meat is well done, but as it rolls in it becomes medium well, medium, medium rare, and then rare,” explains Albisu. “There are different experiences all wrapped up in one steak.”

Chefs are also experimenting with the sauces they serve with their prime proteins. Though classics like au poivre, béarnaise and Roquefort remain popular, both Albisu and Tammero have noticed a blooming interest in chimichurri sauce. Made with chopped parsley, minced garlic, oil, vinegar and a selection of spices that can include paprika, cumin and thyme, the sauce is a longtime favorite in South and Central America. “There’s nothing that pairs better with a rich, well-cared-for steak than a very vibrant, acidic, herby sauce,” Albisu says. “I rarely eat steak without chimichurri.”

Whether guests ultimately order classic cuts prepared traditionally or newly popularized artisan beefs given a modern twist, they are stampeding back to steakhouses across the country in droves. Even as other restaurant concepts have show declines in recent years, steakhouses are experiencing a renaissance. Albisu believes this revival is grounded in steakhouses cross-board appeal that crosses social and economic strata. “Steak brings people together,” Albisu says. “There’s nothing more American than a great steak dinner.”