Americans love a good steak — and a good deal
It’s been a good few months for Darden Restaurants. Sales were up 6% in the second quarter of its fiscal year. The company owns a number of chains you probably know: Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen and The Capital Grille.
In recent months, same-store sales have been up most at Darden’s more casual restaurants — 7.5% at LongHorn and 2% at Olive Garden.
Same-store sales at its finer-dining restaurants, meanwhile — Capital Grille, Eddie V’s and Ruth’s Chris Steak House — were down nearly 6%.
At The Capital Grille, you can get a filet mignon or a dry-aged New York strip steak for about $60. Or there’s always the porcini-rubbed bone-in rib eye for $80. At LongHorn Steakhouse, meanwhile, you can get a filet or a New York strip for around $30.
These days, Andrew Sharpee at AlixPartners said, more people seem to be opting for the latter.
“LongHorn, it’s a good-quality steak in the minds of the consumer at a reasonable price,” he said. “It’s not inexpensive.”
But it’s not overly expensive either.
Sam Oches at Nation’s Restaurant News said 2024 has been a year of people looking for deals and value. When it comes to eating out, customers are trading down, he said, from fine dining to casual and from casual to fast-casual.
“Casual-dining brands, I think, are really benefiting from people who still want a high-quality experience, they still want a great meal, but they don’t want to spend as much money,” he said.
A lot of companies don’t want their employees to spend as much money these days either. And Sharpee at AlixPartners said that has posed another challenge for expensive restaurants.
“You know, the business traveler drives a lot of the higher-end finer dining. And as folks are being told to be mindful of their expenses, that’s creating some headwinds in fine dining,” he said.
Casual restaurants have another advantage over fancier ones these days too, said Stephen Zagor at Columbia Business School: delivery.
“Delivery has become a force in restaurants. And you see it much more frequently in more modest-priced restaurants, more casual restaurants, than you do in luxury restaurants,” he said.
Because if you’re going to spend $60 or $80 on a steak, you probably want the nice table cloth and the ambiance to go with it.
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