Wanna veal chop with that video conference? How about a porterhouse with that product launch?
Steakhouses, battling rising beef prices and bite-sized same-store sales increases, are looking to add some sizzle to their top line through innovative, off-the-menu marketing maneuvers.
At Morton’s The Steakhouse, management has teamed up with Velocity Broadcasting to bring state-of-the-art video conferencing to many of its 71 restaurants.
At the same time, Morton’s is putting more marketing muscle behind its boardroom dining facilities. The company rings up 20 percent of its $301 million in total sales from groups booking the boardroom, it said.
In the Midtown Manhattan location, the boardroom is booked 92 percent of the time, the GM told The Post. And that was before Morton’s hired Velocity to sell the rooms to its clients.
Morton’s, selling at 15 times its expected 2007 earning, at a discount to its peer group average of 19, is trading well off its year high.
“We believe this discount will diminish as the company continues to deliver strong results,” Thomas Morabito, who follows the stock for Susquehanna Financial Group, wrote in a report last week.
Morabito believes upscale steakhouses like Morton’s are somewhat insulated from consumer pressures that lead to reduced discretionary spending.
The optimism is in place despite price increases pushed through by Morton’s and rival Ruth’s Chris – the result, in large part, of the rising price of prime beef. Just 2.7 percent of the beef graded this year earned the Prime grade, according to Aimee K. Marcel, a restaurant analyst with Jefferies & Company.
Marcel recently lowered her earnings estimate on Ruth’s Chris based, in part, on the higher beef prices but maintained a buy recommendation on the stock. Ruth’s Chris, trading at 17 times 2007’s estimated earnings, is trading well off its 2006 high of $23.28. It closed Friday at $18.95.
To battle dwindling same-store sales increases, Ruth’s Chris has put energy behind a wine training program. It has borne fruit, growing wine sales 128 percent last year over 2004.
Morton’s closed at $15.70, off its $20.25 high for the year.
SELLING THE SIZZLE
Comparative return of S&P 500 and Morton’s and Ruth’s Chris