Author Fran Lebowitz once said that "my favorite animal is steak," and apparently she has a lot of company.
Steakhouse house restaurants and breakfast chains have been faring well during an otherwise challenging time for the dining industry, according to Placer.ai.
DON'T MISS: Amazon Manager's 'Chipotle for Pasta' Could Be Next Billion Dollar Business
The location analytics company said the dining sector has been slow to fully recover from the impact of the covid pandemic.
Inflation and constrained consumer budgets don't hold out much hope for a 2023 comeback, the firm said. However, there were some bright spots.
Placer.ai reviewed the year-over-three-year visitation trends to 20 of the largest chains in the country and found that Texas Roadhouse (TXRH), and Darden Restaurants' (DRI) LongHorn Steakhouse and Capital Grille all reported growth
Beefing Up the Business
The breakfast restaurants First Watch and Waffle House also saw a rise in popularity.
Texas Roadhouse reported 17.5% year-over-three-year growth in January, while LongHorn Steakhouse, and The Capital Grille saw growth of 5.3%, and 0.5%, respectively.
First Watch exceeded January visits by 18.2% year-over-three-year, and Waffle House's visits grew by 9.8%.
The steakhouses and breakfast categories likely benefitted from recent expansions.
Texas Roadhouse is looking to grow from 596 locations to 900 in the next decade, Placer.ai said. First Watch opened 43 stores in 2022 and has plans for annual unit expansion between 10% to 12%, with the eventual goal of operating around 2,200 stores nationwide.
Texas Roadhouse reported fourth-quarter and full-year results on Feb. 16. Baird analyst David Tarantino raised his price target on Texas Roadhouse to $108 from $98, while keeping a neutral rating on the shares.
The analyst said fourth-quarter same-store sales and earnings-per-share missed estimates, the company indicated a much stronger-than-anticipated start to the first quarter that prompted Tarantino to increase his revenue and EPS estimates for 2023,
Mid-Priced Chains Hit by Higher Dining Costs
He noted that his EPS estimate conservatively remains under consensus.
Placer.ai said not all steakhouses and breakfast chains are doing well.
The cost of dining out is 8.2% higher than last year and many middle or lower-income diners are trading down or forgoing a restaurant meal entirely.
Mid-priced chains Cracker Barrel (CBRL), Denny's, (DENN) and Dine Brands Global's' (DIN) IHOP experienced a decline in restaurant visits, while lower-priced chains like Waffle House benefitted from the change in consumer habits.
Placer.ai said the pandemic saw the first instance of QSR, or “Quick Service Restaurants," outpacing the fast-casual category.
QSR visits per location exceeded fast-casual average visits per location by around 35% in the second quarter of 2020.
The trend continued in the third quarter of 2020, but fast-casual returned to outperform QSR for most of 2021 and early 2022.
Since the second quarter of 2022, however, as consumers became more concerned about inflation than covid-19, visits to the fast-casual segment have lagged behind QSR.
