For a while, given Americans' obsession with high-protein fare, steak houses have been rarin' to go. Red-meat purveyor Outback Steakhouse (NYSE: OSI) gave an anemic outlook today, though, warning that it won't meet second-quarter expectations, an admittance that sent its stock tumbling. The company blamed the high cost of certain commodities, including beef.
It may be puzzling, but perhaps not a huge surprise. Last week, longtime Fool Rick Munarriz observed similar woes befalling Lone Star Steakhouse (NYSE: STAR). However, he noted that oddly, upscale concepts such as steak house Smith & Wollensky (Nasdaq: SWRG) and RARE Hospitality's (Nasdaq: RARE) Capital Grille have fared well in recent months, as opposed to their more casual steak house brethren.
Meanwhile, it's not as though the casual restaurant biz hasn't seen other big winners recently, such as Ruby Tuesday (NYSE: RI), which Nathan Slaughter pointed to yesterday as a second-quarter standout.
Outback said that it's not only the high price of beef but also high prices of other commodities, such as dairy and produce, that slammed its outlook. In response, the company said its second-quarter earnings will come in a whopping 10% lower than analysts' expectations. Sluggish same-store sales and high labor costs also stacked up to the disappointing view.
Sure, rumors abound that the number of Americans adhering to low-carb diets is starting to ease after last year's high-protein craze. However, there's no reason to believe that it's taken such a slide yet as to slice into the good fortunes of red-meat chains such as Outback and Lone Star. Plus, it's arguable that steak will never go out of style.
Is this just a random consumer trend or a sign of growing disinterest for Outback and Lone Star -- as diners line up for other venues they find more appealing? It's hard to say, but given America's continued love affair with steaks, it's an area that deserves to be watched.
Are you on a low-carb diet? What steak houses do you prefer, if any, to get your protein kicks? Sign onto the Low Carb Way of Life discussion board, only on Fool.com.
Alyce Lomax does not own shares of any of the companies mentioned.
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