America's Steakhouses Are Struggling

Soaring beef prices and Delta variant uncertainty have wounded the fine dining scene.

Ah, the classic American steakhouse. That hushed, velvety realm of white tablecloths, wedge salads, scalloped potatoes, and $150 dry-aged steaks. Classic steakhouses are an institution for a reason; unfortunately, the Delta variant, combined with sky-high beef costs, may take a serious toll on what Reuters calls "a sector seen as a barometer for full U.S. economic recovery."

Reuters recently reported that the steakhouse sector managed to stay afloat during the height of the pandemic—but new challenges arise every day. "While many top steak restaurants found new customers by reinventing themselves during the crisis, the comeback of the $5 billion U.S. premium steakhouse sector depends on expense-account-wielding executives resuming fancy business events and affluent tourists flocking to Broadway theaters and other attractions," Reuters writes. "But travel and group events are again at risk as Delta infections and deaths mount."

At the same time, wholesale beef prices are approximately 40% higher than they were a year ago, according to the U.S. Bureau of Labor Statistics. Some top steakhouses have risen to the challenge, adding outdoor dining, expanding their bars to boost higher-margin liquor sales, and even delivering premium meats to customers' homes. But some didn't fare as well. Take, for example, Ruth's Chris Steak House, which Reuters reports "permanently closed some of its restaurants that weren't compatible with delivery and takeout."

Did steakhouses bounce back as patrons returned to in-person dining earlier this year? Yes, definitely. But average sales at "premium" steakhouses peaked in early July and fell slightly in the first week of August. Will the Delta variant impact steakhouse gatherings during the bustling holiday season? It's too early to tell, experts say. But, if the rest of the hospitality industry is any indication, America's steakhouse scene could be in for a much bumpier ride than anyone anticipated. Watch out, Salt Bae.

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