Let's Play High-Steaks Poker

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After losing several steakhouse chains to the voracious appetites of fattened private-equity firms, we investors appear to be getting one back. Del Frisco's, the high-end chophouse arm of Lone Star Steakhouse and operator of the swanky Sullivan's Steakhouse and Del Frisco's Double Eagle chains, is going public.

The same company that acquired Lone Star Steakhouse last year in a $629 million deal will retain a steak -- er, stake -- in the newly public company.

The timing could be better. Several casual and upscale concepts have gone private since last year. If established chains are going away at fire-sale prices, you have to think that this isn't a very attractive sector.  

• Lone Star Steakhouse went off the market last year, after struggling to retain its 1990s glory.
• CBRL Group (Nasdaq: CBRL) sold off its Logan's Roadhouse chain, as a sign of surrender to concentrate on its flagship Cracker Barrel restaurants.
• Smith & Wollensky weighed rival buyout offers before choosing a suitor, but it spent most of its public tenure in the single digits.
• OSI Restaurant Partners went out on top, but it came at a point where the future growth prospects for its Outback Steakhouse workhorse appeared iffy.
• Darden (NYSE: DRI) recently acquired Longhorn parent RARE Hospitality, but only after Darden shuttered its own carnivore concept.

Things get even hairier when you look only at Del Frisco's upscale peers that are still standing in the publicly traded realm. Morton's (NYSE: MRT) and Ruth's Chris (Nasdaq: RUTH) have gone public over the past two years, and both are trading lower than their original IPO prices. Why should Del Frisco's fare any better?

Put simply, steakhouse chains are out of favor. Shares of Morton's, Ruth's Chris, and Texas Roadhouse (Nasdaq: TXRH) can be had for less than $13 apiece. Even more casual meat-lover concepts are doing poorly, with Steak n Shake (NYSE: SNS) and Famous Dave's (Nasdaq: DAVE) embracing 52-week lows.

So what are you doing, Del Frisco's? Do you really need to play your hand now? Now isn't the time to call the market's bluff. How low a price will you have to settle for at the IPO level? Smart investors will know how hard it is to buck the trend that burned IPO buyers at Morton's and Ruth's Chris.

Keep that IPO on the fire a little longer, Del Frisco's. Don't bother serving it until it's well done, even if steak lovers do tell you that a well-done filet mignon is heresy.