Steak lovers know they can count on Morton's
The upscale steak house chain posted better-than-expected fourth-quarter results on Friday. The company reversed a year-ago loss to earn $0.33 a share for the period. Revenue inched 8.7% higher to $90.9 million.
Morton's went public a year ago, after having posted deficits in 2004 and 2005. It redeemed itself in 2006, and things are looking up in 2007. The company is guiding investors to expect $0.97 to $1.00 a share in profits for the year. Revenue will come in between $355 million and $360 million, as new chophouses and a 2% to 3% spike in comps guide the top line higher.
It's not just about the meat these days at Morton's. The five to seven new units that will open this year will feature the Bar 12-21 concept. Unlike the original attached bars that seemed dark, stuffy, and just a way to pass the time until your table was ready, Bar 12-21 is its own attraction. Ambient lighting and a relaxed vibe hope to draw well-heeled sippers and stirrers. If you're hungry, you can order up mini-filet mignon sandwiches or cheeseburger sliders to go with your libations.
Bar 12-21 has been a hit -- a cash cow in a red-meat world, if you will -- and Morton's continues to remodel many of its older bars into the tony yet accessible new concept. Personalized wine lockers for its regulars is a nice touch and a catalyst for repeat business.
Back in the main dining room, things aren't going too shabbily. Comps improved 6.4% at Morton's. That's in line with the unit-level improvement that rivals Ruth's Chris
Can Morton's expand at will? Not necessarily. There are limits as to how many markets can tolerate steak houses where a 48-ounce porterhouse will set you back $85, before you tack on the side dishes. One of the executed leases for this year is just a few miles from my house, yet that location will be fewer than five miles from the first Morton's in Miami.
An improving economy and a need to impress business clients will keep the chophouses humming along in the near-term. Just keep an eye on market saturation. Casual steak joints like Texas Roadhouse
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Longtime Fool contributor Rick Munarriz enjoys a good steak house every now and then, and he welcomes having a Morton's closer to his home soon. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.