Sharpen your steak knife. Or maybe you already have, judging by the decent quarters served up by both Outback Steakhouse (NYSE:OSI) and Rare Hospitality (NASDAQ:RARE). So far, the proof's in the Worcestershire sauce -- nothing's getting between Americans and their red meat, including a brush with mad cow disease.
Outback reported a fourth-quarter net profit of $0.58 per share, or $45.3 million, compared with $0.50 per share, or $39.2 million, in the same quarter a year ago. Revenues rose 19.2% to $718.1 million.
Same-store sales for the quarter were higher across the board, with one of its less-prevalent venues, Fleming's Prime Steakhouse and Wine Bars, the leader, up 12.8%. The company has a total of 1,055 restaurants, both company owned and franchised.
Another red meat play, Rare -- the name behind Longhorn Steakhouse and Bugaboo Creek, as well as the urban, upscale Capital Grille -- posted fourth-quarter earnings of $0.34 per share, or $12.0 million, as compared to $0.24 per share, or $8.2 million, one year ago. Total revenues increased 18.2% to $181.8 million.
As with Outback, Rare's concepts increased same-store sales in its restaurants. Its Capital Grille scored highest, with a 12.6% boost. Showing plenty of room for growth, Rare has a total of 239 restaurants, both company owned and franchised.
Mad cow was never quite expected to be the threat to steak chains as it could have been to restauranteurs who specialize in ground beef, seeing how science has ruled out danger in steaks.
However, Wendy's (NYSE:WEN) recently gave a conservative view for the following year, in part because of rising beef prices, a contingency that seems likely to impact steakhouses as well.
Due to the public's appetite for beef, both stocks have been flirting with their yearly highs of late. However, given that very momentum, it seems a good time to be in the red -- red meat, that is.
Did this Take attract you because of its protein focus? Are you on Atkins, and just can't get enough steak, or are you considering the diet? Pull up a place at the Low Carb Way of Life discussion board.
Alyce Lomax does not own shares of any of the companies mentioned.
