The Steakhouse Index Their stocks are down. Should we worry about the rest of the economy?

[RamboLiberal]

If you want to understand how high energy prices are impacting the economy, you could spend your days reading the Wall Street Journal or consulting with economists. Or you could go have a really expensive New York strip steak at the Palm or Morton's.

High-end steakhouses have expanded rapidly in recent years thanks to an economic expansion, the popularity of cholesterol-reducing statins such as Lipitor, and the low-carb/high-protein Atkins/South Beach diet crazes. You'll now find outposts of Morton's, Ruth's Chris, and several competitors in all the best suburban strip malls, edge-city shopping districts, and gentrified downtowns.

The financial results of these testosterone-filled cow palaces reveal much about several trends affecting the U.S. economy. First, they are a neat case study in the unexpected collateral effects of high energy prices. The high price of oil has spurred demand for ethanol, which in turn has boosted the price of corn. Corn is a primary "input"—or as we say in English, "food"—for beef cattle. (Here are charts showing the rising prices of corn futures and cattle prices over the last several years.) The combination of higher grain and energy prices has led to burgeoning inflation in food. In the first quarter of 2007, food prices rose at an annualized rate of 7.1 percent, according to the Bureau of Labor Statistics. Like many businesses, steakhouses face the classic choice of swallowing the higher costs—and accepting lower margins—or raising prices.

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To aggravate matters, the rising cost of beef appears to be accompanied by slowing demand. At Morton's steakhouses, same-restaurant sales rose by a meager 0.5 percent in the first quarter of 2007. For the year, Morton's expects same-restaurant revenue growth of between 1.5 percent and 3 percent. When Ruth's Chris reported first-quarter sales in April, it reduced expectations of same-store sales growth substantially. At Rare Hospitality, same-store sales actually fell 1 percent in the most recent quarter. For the remaining three quarters of fiscal 2007, the company sees same-store revenue growth of between 0 percent and 2 percent for its Longhorn Steakhouse outlets. In each instance, same-store growth is rising at a rate slower than inflation.

Not surprisingly, given the shrinking margins and slowing revenue growth, the stocks of the major public steakhouse companies have done poorly in recent months. Here's a three-month chart of Morton's, Ruth's Chris, and Rare Hospitality compared with the S&P 500.

http://www.slate.com/id/2167201

[WCGreen]

1. But they have really really really good steak...

Mortons better than Ruth Chris...

I love a great steak every now and then...

[flycessnas]

3. You're Better Off...

...ordering something from a packing house like Allen Brothers and cooking it yourself.

Go to Costco, get yourself an iron skillet and follow the directions for seasoning it. Then, go to the internet and find one of those steak searing recipes where you preheat the skillet in the oven at 500 degrees. Follow the instructions and you'll get a better steak at a much cheaper price. Do a takeout on the side orders if you have to but cook your own steak!

If you're on a budget, buy a piece of tenderloin from Costco and cut it up into steaks. I may do this for Christmas.

If you live in a rural area, spend a little more money on a smoker or if you're handy and have the tools...build one!

Being half Pennsylvania redneck does have its advantages, I guess.

[WCGreen]

6. I bought a rib roast there a few weeks back....

Damn good stuff...

I am going to sear the steak....

Sometimes, though, I just want to go out with some friends or clients...

[bamademo]

10. Try this

I can personally testify this recipe yields one of the best steaks you'll ever eat.

Pan Seared Rib Eye Recipe courtesy Alton Brown
Show: Good Eats
Episode: Steak Your Claim





1 boneless rib eye steak, 1 1/2-inch thick
Canola oil to coat
Kosher salt and ground black pepper

Place 10 to 12-inch cast iron skillet in oven and heat oven to 500 degrees. Bring steak(s) to room temperature.
When oven reaches temperature, remove pan and place on range over high heat. Coat steak lightly with oil and season both sides with a generous pinch of salt. Grind on black pepper to taste.

Immediately place steak in the middle of hot, dry pan. Cook 30 seconds without moving. Turn with tongs and cook another 30 seconds, then put the pan straight into the oven for 2 minutes. Flip steak and cook for another 2 minutes. (This time is for medium rare steaks. If you prefer medium, add a minute to both of the oven turns.)

Remove steak from pan, cover loosely with foil, and rest for 2 minutes. Serve whole or slice thin and fan onto plate.

[mainer]

11. I'm copying this into my recipe book

thanks!

[Lint Head]

4. Anythings better than Ruth Chris. They advertise on Rush

Limpballs. :dem:

[Tesha]

12. The best steaks come off of Mama Tesha's grill...

...bought cheap ('cause they're about to expire, which
is pretty much what "custom aged in our coolers" means),
marinated by Mrs. Tesha in a wide and ever-changing variety
of savoury marinades, and then grilled by Mr. Tesha on our
DCS cook-top.

Thank FSM and science for statins!

Tesha

[flycessnas]

13. Yeah...

...here's another one:

When I was in college, I lived at home with the parents and would occasionally entertain female guests when the folks weren't around. We had an older gas grill with cast iron burners and cast iron grids...so it always got really hot if I wanted it to.

Take two porterhouses or filets and soak them in the italian salad dressing of your choice for twenty four hours. Ken's is good but, bottom line, whatever you have or what's on sale. Then, run the grill up as high as the motherfucker will go (was in the days before infrared burners...today you'd burn them) and slap those babies on for about five minutes each side. This is called "Pittsburghing", where the meat is charred on the outside and rare on the inside. This is especially good with a filet because tenderloin is the leanest cut of beef there is and it tends to dry out on the grill.

Try it, but don't try it too much...not without Lipitor.

[Tesha]

14. That sounds just about right...

> Take two porterhouses or filets and soak them in the
> italian salad dressing of your choice for twenty four
> hours. Ken's is good but, bottom line, whatever you have
> or what's on sale. Then, run the grill up as high as the
> motherfucker will go (was in the days before infrared
> burners...today you'd burn them) and slap those babies
> on for about five minutes each side. This is called
> "Pittsburghing", where the meat is charred on the
> outside and rare on the inside. ..

A'yup, that sounds just about right. :)

Tesha

[Retrograde]

16. the marked-down meats

The marked-down meat section (the stuff that's a few days old, starting to brown on the surface but still edible) of my local market has some real bargains sometimes: I've gotten lamb chops, filet mignons, pheasant(!) and all sorts of interesting prepared items for what they normally charge for hamburger. It's catch as catch can, and usually has to be eaten that day (although I've been able to freeze the marinated meats) but it's good quality and inexpensive, just not as pretty as it could be.

[flycessnas]

17. Ya Gotta...

...shake the BBs out before preparing pheasant.

(grin)

[JeffR]

2. Their margins on beef are more often than not outrageous

So if they have to tighten their corporate belts a little, maybe they'll find they actually can boost volume sales.

The worrying thing here is what this might speak to in terms of retail grocery prices and availability, especially for staples. Poor people will take the first bad hit, or I should say they already have. And they won't be the only part of our Gilded Age social strata to suffer. Trickle-down economics will finally start to trickle back up. Warm and nasty-smelling in either direction.

[riverdeep]

5. A general observation.

Perusing this forum right now, there's about three or four stories all basically saying the same thing-the good times are coming to an end. Weird coincidence?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2513450

-Hunting Shops and Gun Dealers are Having a Bad Year

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2513438

-Stores Desperately Seeking Shoppers On Super Saturday

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2513447

-*sobs* Circuit City chief is 'very dissatisfied' *uncontrollable crying* (due to plummeting shares)

[Kansas Wyatt]

15. Catch 22 of America's Shopping Economy

If the incomes of most people are down and dropping further, while cost of living prices increase rapidly, then it has a direct effect on what they can purchase.

Surely these Idiots in Washington thought about this, before they mandated this policy for America and sold out Working Americans.

[RadiationTherapy]

7. My wife works at a fine dining restaurant

and the cost of food combined with less disposbale cash for nights out and catering is making for hard times for the owner.

My wife's take home is also dwindling as a result.

[fasttense]

8. It's beginning to look a lot like a Depression, ever'y where you go. n/t

[SpiralHawk]

9. "Smirk, smirk, smirk" - Commander AWOL